News

Supply curves

Question 1

Cheeseburgers

Plot the original supply of cheeseburgers per week for a small
takeaway restaurant, and the new supply curve following a rise in
the cost of cheese.

PRICE
(£)

ORIGIAL QUANTITY
SUPPLIED

NEW QUANTITY
SUPPLIED

5.00

400

360

4.50

360

320

4.00

320

280

3.50

280

240

3.00

240

200

2.50

200

160

2.00

160

120

1.50

120

80

Question 2

In the following cases, draw an original supply
curve (S) and a new supply curve to the left or right, and label it
S1.

The supply
of Economics textbooks, following a fall in the cost of
printing.

Ice cream,
following a rise in the cost of milk.

DVD
Players, following the introduction of new technology by DVD
manufacturers.

Underground
travel, following a strike by Tube drivers.

The world
supply of oil, following the discovery and refining of large oil
reserves in Russia.

The supply
of wine from France, following the imposition of a tax on
imported wine.

The supply
of bread in the UK, following the granting of a subsidy by the
government to bread producers.

Question 3

The market for English apples

The price of English apples is likely to rise in the
coming months following the unusually cold and wet conditions during late
spring and early summer, as reported by the Sunday telegraph (16/09/2012).
Conditions continued to deteriorate following heavy rainfall in late August.
The result is that yields are some 20% down on previous years for many
English varieties. The impact has not been even, with the hardest hit apples
growers suffering a 90% reduction in crops compared with average crop
sizes. Some supermarkets have already raised the price of apples to around
£1 per pound (lb) and many are switching to lower priced imports.
Manufacturers of tarts and pastries are likely to pass on the rising cost of
apple fillings, although the current recession may act as a constraint on
the extent to which this will happen.

(Adapted from The Sunday Telegraph).

Using demand and supply analysis, explain how the
poor weather conditions are likely to affect the market for English
apples. (4)

Why might food manufacturers not pass on the rising
cost of fillings to supermarkets? (4)

Using a diagram, assess the likely effect of a fall
in incomes on the market for fruit. (10)